Dmitry Medvedev was to be sworn in Wednesday as Russian president under the shadow of his powerful mentor Vladimir Putin and growing challenges to the country`s oil boom from corruption and inflation, according to AFP.

The inauguration of Russia`s third president since the Soviet collapse was set to take place at midday (0800 GMT) in the golden Andreyevsky hall of the Kremlin palace.

Police closed off central Moscow, prompting huge traffic jams, in readiness for the pomp-filled one-hour ceremony.

Medvedev, 42, inherits a booming economy fuelled by massive oil and gas exports, and a country at its most confident on the international stage since the 1991 Soviet collapse.

The inauguration marks the peak of his rise from obscurity as a Putin-era bureaucrat to commander-in-chief of a vast nuclear arsenal and leader of the world`s largest energy producer.

However the mild-mannered bureaucrat, who has never before held elected office, will have to grapple with politically explosive price rises, unbridled corruption, and turbulent relations with the West.

Medvedev, whose March 2 election landslide was critised by independent monitors as partly staged, will also face a challenge on his own doorstep: Putin.

The outgoing president will become prime minister -- parliament will confirm his nomination on Thursday -- and Putin has made clear that the post will become a second centre of power.

Putin was unable to run for a third consecutive term under the constitution. However, by steering in his trusted, longtime aide Medvedev into the Kremlin, the former KGB agent retains a tight grip on the political scene.

Analysts say that at 55, Putin is also young enough to consider a third, non-consecutive presidential term as early as 2012, or even before, if Medvedev were to leave office early.

Some see Medvedev`s lack of a KGB past -- a rare thing in the current political elite -- as a sign that Russia could be in for a post-Putin thaw.

The trained lawyer, who has a bookish manner and professes a liking for the veteran British rock group Deep Purple, is seen as more relaxed than the famously austere Putin.

In pre-election speeches, Medvedev called for the defence of human rights and spoke strongly against corruption and "legal nihilism."

However, critics question his liberal credentials, pointing to his chairmanship of Gazprom, Russia`s gigantic and highly opaque natural gas monopoly, and a close relationship with Putin stretching back to the early 1990s.

Medvedev has said little about his foreign policy stand and it is unclear how much influence the hawkish Putin will continue to exercise from his government office.

The change of power comes at a difficult time in East-West relations, with the United States condemning Moscow`s support for separatist rebels inside neighbouring Georgia, and Moscow furious over NATO`s promise to give membership to Georgia and Ukraine.

Medvedev has said his first foreign trips will be to oil-rich Kazakhstan and to China, a growing partner and energy customer of Russia. He will also be attending the Group of Eight summit in Japan in July.

The choreography at the Kremlin inauguration will ensure that Medvedev and Putin share the limelight, just as they will share power after.

According to a presidential spokesman, events in the Kremlin start with the Russian flag, presidential standard and a copy of the constitution being carried through the ornate Georgievsky and Andreyevsky halls.

Putin was set to enter the Kremlin palace, followed by Medvedev, the spokesman said. Then Putin was due to give a speech before handing Medvedev the golden chain of office.

Medvedev was then to give his own speech, take the oath of office, and be declared president by the head of the constitutional court.

On Friday, the two men, dubbed the "tandem" by Russian newspapers, will star at an annual Red Square military parade featuring tanks and nuclear missiles for the first time since the Soviet crash.